A320’s Success Confirms Consortium’s Market Presence

JetBlue's order for new A320 models confirms European company's competitive strength

Late last month, JetBlue Airways ordered 35 additional AirbusA320-series twinjets, both Current Engine Option (CEO) and New Engine Option (NEO) models, to further expand capacity and inaugurate new routes. For Airbus, the contract is significantly more than a routine business victory, for two symbolic reasons. First, the New York-based airline's decision marks the A320 family's 10,000th order, a milestone. And the new aircraft will be delivered from the manufacturer's Mobile, Ala., facilities currently under construction.

Unexpectedly, Airbus didn't announce the order with much fanfare, in an indication that the A320's near-domination in its market segment is taken for granted. Toulouse executives claim 60% of the market in sales, covering nearly 2,400 aircraft, since the reengined NEO derivative was launched. In addition, although this is no longer news, establishing production facilities in the U.S. (after building a final assembly line in China) is expected to clearly confirm Airbus's evolution into a global player and Boeing's European counterpart. By 2018, between 40 and 50 A320/A321s will be assembled in Mobile each year, perhaps many more in the longer-term.

The A320-series production rate is now 42 aircraft per month and will increase to 46 as soon as the Mobile production line is completed. And this may prove insufficient, keeping in mind the rapidly increasing backlog. However, Chief Executive Fabrice Bregier, adopting a cautious stance, says production will not be further increased before successfully achieving the delicate transition between CEOs and NEOs. But, by the end of the decade, more than 50 A320s could well be assembled between southwest France, northern Germany, China and the U.S.

All of this is the outcome of a major, risky industrial challenge devised in 1983. In those days, Airbus (then called Airbus Industrie) was a loose industrial grouping established 13 years earlier by Aerospatiale, British Aerospace, Construcciones Aeronauticas and Messerschmitt-Bölkow-Blohm. The consortium produced the A300B and a shortened-fuselage derivative, the A310. To further expand its product range, it long hesitated between launching a next-generation 150-seat short/medium-haul twinjet or a long-range widebody. The envisioned larger aircraft, strongly supported by Germany, later evolved into the A340, symbolizing Europe's return to a key market in the aftermath of the European aviation industry's strategic errors and twists of fortune.

Both options were high-risk gambles. In the short-haul market, Boeing's 737 was an impressive success, Douglas's DC-9/MD-80 sold well, and the Boeing 727 trijet was also a best-seller. Regarding long-range aircraft, after the British VC-10's failure, Boeing, Douglas and Lockheed were running the show. Moreover, Airbus's legitimacy was largely nonexistent while comments—mostly from the U.S.— frequently made fun of the European governments' reimbursable loans (with low-interest rates) granted to the consortium. Nasty jokes about the European taxpayers' deep pockets were the rule and profitability apparently remained beyond the horizon. Moreover, not unexpectedly, Boeing executives, in addition to underestimating the Europeans' determination to break the U.S. monopoly, tirelessly repeated the mantra that the 737 was such a good product there was no justification for developing a similar aircraft conceived by a vague consortium.

In March 1984, Airbus eventually launched the A320, to an ocean of skepticism. To say the least, remembering the scene is simply astonishing. Then-Airbus CEO Bernard Lathiere and Chief Operating Officer Roger Beteille described the A320 as the aircraft establishing all-new rules, equipped with fly-by-wire flight controls and the flight envelope's electronic protection. They were so confident in the program's success they predicted achieving a 25-30% market share in no more than 10 years, and unveiled a plan to produce as many as five A320s per month, and eight per month at a later stage, an unprecedented production target at the time. Lathiere and Beteille added that the A320 program would become profitable by the time the 600th aircraft was delivered. Audacity or effrontery? Here comes the answer, 10,000 aircraft later.